Economy suffering

EXPERTS OPINE THE LOSS INCURRED BY THE COUNTRY CANNOT BE CALCULATED AS EVERY SECTOR WILL HAVE LONG-TERM IMPACT

KATHMANDU: As Nepal promulgated its new constitution through the Constituent Assembly on September 20, people from different quarters welcomed it. The private sector is excited with the promulgation of the new constitution not only because the country got rid of the long-standing transitional phase but also because the constitution is directly connected with the fate of the country and its citizens. The private sector has pinned high hopes on the new constitution and that it will fast track the country on the road to economic development and prosperity.

However, the private sector is seriously concerned about the prolonged bandh for over a month in the Tarai. The bandh has not only halted imports and exports but has also largely affected industries in the region.

The private sector claims to have borne a loss of around Rs 70 billion and counting because of the unrest. Moreover, the government is also losing revenue.

Revenue hit

According to the Department of Customs (DoC), the government has missed its revenue collection target by 35 per cent in Bhadra (mid-August to mid-September). Although DoC had set a target of collecting Rs 17.08 billion in revenue in the last month, it was able to earn only Rs 11.2 billion, which is 35 per cent less than the target. “We could not meet our revenue collection target for the last month due to the Tarai bandh,” said Sishir Kumar Dhungana, Director General of the DoC, adding, that if problems continue to persist it will be tough to meet the target.

According to him, the government has set a target of collecting Rs 205 billion in revenue by the end of this fiscal year.

“By now, we should have got rid of all political instability and focused on the rapid economic development of the country.”

PASHUPATI MURARKA, president FNCCI

" Already affected by the April earth-quake, the economy of the country has again been victimised by the political unrest in Tarai"

RAJESH KAZI SHRESTHA, President, NCC

"Since most industries in the country and major custom points are located in the Tarai, the national economy has been badly affected."

MANOJ KEDIA, vice president, CNI

All sectors affected

“The private sector is excited about the promulgation of the new constitution as the country has successfully come out of a prolonged transitional phase,” said Pashupati Murarka, President of the Federation of Nepalese Chambers of Commerce and Industry, the largest umbrella organisation of the private sector. Stating that the Tarai bandh is a major problem for the economy, he said, “Now is the time to focus on the path of economic development and prosperity.”

Citing that the private sector has been losing around Rs two billion per day due to the strike, he said, “The prolonged Tarai bandh is a discouraging sign for the private sector.” He informed that the environment for investments is deteriorating day by day. “We have been urging the   government and concerned parties to resolve all the issues as soon as possible,” he said, adding that if the existing situation continues for long then the economy of the country will be badly hit. He stressed, “By now, we should have got rid of all political instability and focused on the rapid economic development of the country.”

Experts opine that the loss incurred by the country cannot be calculated in precise amount as the bandh has affected every sector and will have long-term impact on the economy. The industrialists and traders have been urging the government to create an environment to run their industries, as manufacturers have been compelled to stop taking consignment of goods from the international market. Moreover, most industries are reeling under the shortage of raw materials.

Economic viability questioned

“The new constitution has restored confidence in the private sector,” said Economist Bishambar Pyakurel, adding that the existing situation though is discouraging. “The way federal structures have been developed, it does not seem to be economically viable,” he said. Citing that there will be huge revenue expenditure gap among development districts, he said, “Around 32 per cent of the total development districts will meet merely five per cent of their expenditures.” According to him, the central government will have to take the huge burden of these development districts to empower them.

He is of the opinion that there is no real calculation of the economic loss caused by the ongoing Tarai unrest. Citing that the inflation rate is skyrocketing in double-digits, he stated, “There is no relation between inflation and government policy. It is out of control.” However, he is quite optimistic about the economy of the country. “Once the Tarai unrest is resolved the economy of the country will takeoff.”

Losses piling up

Due to the prolonged protest in Tarai, a large number of imports lie stranded at Kolkata port of India, Nepal's only gateway for third country trade. Importers are compelled to pay high demurrage charges to the port authority and shipping liners with their goods stuck at the port yard since a long time. If things do not improve for the better, the country’s economy will have a tough time to move ahead at a pace to ensure development and prosperity of the country.

“The private sector is excited with the promulgation of the new constitution but at the same time it is worried about the prolonged Tarai bandh,” said Rajesh Kazi Shrestha, President of Nepal Chamber of Commerce. Citing that there is no account of how much loss the country has incurred during the last month, he said, “Both industries and trade have been badly affected by the bandh and we will have to bear the long-term consequence.”

“Already affected by the April earthquake, the economy of the country has again been victimised by the political unrest in Tarai,” said Shrestha. According to him, both the government and agitating parties should resolve the issues through dialogue as soon as possible and let the country move on the path of economic development and prosperity. “As soon as the Tarai unrest is resolved the economy will start to improve,” he opined.

“Every single industry has been closed or affected for over a month due to the Tarai bandh,” complained Manoj Kedia, Vice President and Spokesperson of the Confederation of Nepalese Industries (CNI), adding that the majority of industries are on the verge of collapse due to billions in losses. “Since most industries in the country and major custom points are located in the Tarai, the national economy has been badly affected,” he added.

Blaming both the government and agitating parties of being irresponsible, he said, “Neither government nor agitating parties are serious about the degrading economic situation of the country.” Citing that the life in the Tarai has become hell, he said, “We are tired of bandhs. Bandh is not the solution to any problem so the agitating parties should resolve their issues through dialogue.” According to him, if things don't improve soon, the country will have to bear a huge economic loss.